Texas, a "Scottish pop rock band from Glasgow" sings Say What You Want. It's a catchy tune. A lyric sticks with me:
Yeah, you can say what you wantBut it won't change my mind
Perhaps that is a recurrent theme in America. It somehow takes me back to a Dave Edmunds hit in 1970, I Hear You Knocking:
I hear you knockingBut you can't come in
These pop culture references came to mind recently when I read about the decision of the 11th Circuit Court of Appeals in Humana Med. Plan v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Ci. 2016). The case has to do with a Medicare Advantage Organization (MAO) and a suit for reimbursement under the Medicare Secondary Payer Act (MSP). The case is 18 months old but came back to the fore recently because of another decision in the case rendered on January 25, 2018. The effect of the January decision is that the 2016 decision stands.
In 2016, a three-judge panel of the court, Judges Pryor, Black, and Parker concluded that the MAO had a "private cause of action" as against "a primary payer." The MAO was Humana, and it provided medical services to Ms. Reale. The MAO was not a "primary" payer for medical services, because federal law specifically provides that "Medicare payments are secondary and reimbursable if any other insurer" has responsibility. The primary payer, the "other insurer" was Western Heritage Insurance Company.
In 2016, a three-judge panel of the court, Judges Pryor, Black, and Parker concluded that the MAO had a "private cause of action" as against "a primary payer." The MAO was Humana, and it provided medical services to Ms. Reale. The MAO was not a "primary" payer for medical services, because federal law specifically provides that "Medicare payments are secondary and reimbursable if any other insurer" has responsibility. The primary payer, the "other insurer" was Western Heritage Insurance Company.
Western Heritage insured the condominium association which Ms. Reale alleged was responsible for her injuries. While the Reale lawsuit against that association was pending, Humana issued a "reimbursement request" to Ms. Reale for $19,155.41. Then Western Heritage and the condominium association settled with Ms. Reale (remember Settlements are Contracts (March 2018)).
That contract called on Western to pay Ms. Real $115,000 in exchange for which she dismissed her lawsuit and released the defendants. The Court noted that Ms. "Reale represented in the settlement agreement that there was no Medicare or other lien or right to subrogation." This is perhaps semantics, "request" as opposed to "lien" or "right?" Furthermore, Ms. Reale "agreed to indemnify Hamptons West (the condo association) and Western against any Medicare or other lien or right to subrogation." Thus, if either defendant were called upon to repay Medicare, Ms. Reale would step in and pay instead.
Thus, there was a contract, negotiated among the interested parties, upon the representation that no lien existed and that one party (Reale) would be responsible for any lien or other subrogation obligation. And that returns us to Say What You Want because that is certainly the parties' right. But, this court decision teaches that such an agreement is of little value.
Humana sued Ms. Reale and her attorney for the $19,155.41. The federal court dismissed that lawsuit concluding that "an MAO does not have a private cause of action to recover reimbursement from a beneficiary." Learning of that development, Western Heritage first tried to make the settlement check ($115,000) payable jointly to Ms. Reale and Humana, but Ms. Reale objected (despite her agreement to be responsible). Western elected to make full payment to Ms. Reale only. Ms. Reale then made unsuccessful efforts to determine the appropriate amount due to Humana.
Finding itself unsuccessful with Ms. Reale, Humana then sued Western Heritage for the lien amount and alleging entitlement to "double damages" under federal law. The federal trial court concluded that Humana had a "private cause of action" against the "primary payer," Western Heritage. On August 8, 2016, the 11th Circuit affirmed that conclusion on appeal (three-judge panel of the court described above), agreeing with an earlier similar decision from the Third Circuit in In Re Avandia Marketing, Sales Practises & Products Liability Litigation, 685 F.3d 353 (3d Cir. 2012).
The affirming opinion in Humana was not unanimous, however. Judge Pryor dissented. He noted that "Medicare is governed by a notoriously complex statute." Judge Pryor illuminated issues with Avandia, as well as with the majority's reasoning in Humana. He concluded that "the text of the statute is clear and that Humana failed to state a claim." He would have reversed the trial court.
That was 18 months ago. Following the rendition of Humana, one of the judges of that court asked that the decision be considered by the entire court. This is called a rehearing en banc. And for 16 months that request was being considered. Then, on January 25, 2018, the 11th Circuit in a short order declined to hear the case en banc, leaving Avandia and Humana the law of the land. While that decision required less than a page to communicate, the entire decision is 39 pages long.
The "other" 38 pages of that order is a dissenting opinion by Judge Tjoflat. Judge Tjoflat agreed with Judge Pryor's interpretation of the statute in the panel decision dissent. He concluded that the panel decision "exterminates the state law" that protected payers and MAOs, and instead "substitutes in its place a scheme that is at once nonsensical and punitive." He explains that the outcome "creates a windfall for MAOs that do elect to pay" medical benefits. And, in the process, perhaps discourage that election?
After describing the existing subrogation (assertion of the rights of one party by some other party) rights under state law (the injury to Ms. Reale occurred in Florida), Judge Tjoflat concluded the Court's "decision renders the above provision irrelevant." As framed by the Court’s decision, an MAO’s reimbursement right is vastly expanded." Essentially, he concluded, the decision "amounts to a rewriting of state insurance laws."
What does this illustrate?
First, you can say what you want in a settlement agreement and agree to be responsible for the Medicare lien, but the courts are free to disregard it. "Yeah, you can say what you want, but it won't change (the court's) mind." In settling cases with potential Medicare liens, payers will perhaps now settle for less in order to retain funds for resolution of the Medicare lien? Or, they will perhaps insist on proof of satisfaction of the Medicare lien before settling at all?
As for a judicial correction of the situation, the courts may perhaps hear Judges Tjoflat, Pryor and others "knocking." But, for now, they "can't come in." Perhaps a court will readdress this federal revision (or "extermination") of state law. Perhaps Congress will revise the law to address the intriguing interpretations. Or, perhaps Avandia will remain the law of the land, for litigants and payers to study, interpret, and follow?
For now, at least, the law is "a scheme that is at once nonsensical and punitive." But, at least it is consistently so. Predictability at least allows litigants to plan and act. And, though I began with Texas and Dave Edmunds, the Humana conclusion leads me to Men Without Hats, and their 1982 Safety Dance:
And we can act like we come from out of this world
Leave the real one far behind
The market, government, and most importantly the people would benefit from a better process; a "real world" process in which contracts are respected and honored by courts, one in which the law is neither nonsensical nor punitive.
